The Board agreed that Chad has made meaningful progress overall in implementing the 2016 EITI Standard.

The government has issued public statements of its commitment to the EITI, appointed high-level government officials to oversee and engage in the EITI process, provided substantial amounts of funding for EITI implementation, and ensured the functioning of the national secretariat. Government agencies have participated actively in EITI reporting and dissemination. While stakeholders consulted noted the decrease in government funding in the past two years, they highlighted the government’s commitment to improving transparency in the extractive sector.

The government has conducted reviews of the legal and regulatory environment and taken steps to address barriers to industry participation in the process, including removal of confidentiality clauses in oil contracts. Industry representatives led by Esso have participated actively in EITI reporting and in MSG meetings. MSG membership show that the oil industry has been represented at a high-level and companies have contributed to the design and implementation of the EITI.

The Board agreed that Chad had made meaningful progress on Requirement 1.3. For a summary of the assessment, please refer to the Validation Report and initial assessment.

The 2014 Decree set out a clear mandate for the MSG. Its membership was regularly renewed. Procedures for decision-making and duration of the mandate were clear, but not systematically documented in practice. The Decree did not explicitly mention certain aspects of internal governance and the nominations process for two constituencies was unclear until April 2018. Stakeholders consulted confirmed that the lack of clarity on nominations had not negatively affected the representation of broader constituencies and that the MSG was based on an inclusive decision-making process in practice. The per diem policy was not transparent, with potential conflicts of interest.

The work plan contains objectives aligned with national priorities, has measurable and time-bound activities, provides for plans to address capacity constraints and scope of EITI reporting, as well as plans for follow-up on EITI recommendations. Stakeholder consultations confirmed that the EITI work plan was a result of consultations with stakeholders in all three constituencies. The work plans are fully costed, with indications of the sources of funding.

EITI reporting provides a description for awarding and transferring licences in the oil and gas sector, albeit with incomplete information on technical and financial criteria assessed for the allocation of oil licenses by tender process. No licenses were awarded or transferred in the oil sector in 2016. The report provides a list of active licenses in the extractives sector and the names of license holders, as of April 2018 for the mining sector and as of December 2016 for the oil sector. The report confirms the absence of non-trivial deviations in the mining sector in 2016.

The Chad EITI website provides the most comprehensive repository to date of oil contracts and decrees approving mining licenses in Chad. The 2016 EITI Report lists active research and production licenses in the oil and mining sector, with minor gaps in dates of application and expiry for both oil and mining licenses, as well as coordinates and size for some mining licenses. Stakeholders highlighted that Chad aims to introduce publicly available cadastre systems in the short term, with up-to-date information already available upon request at the MPE.

Following the announcement of new government policy in favour of the publication of oil production contracts in April 2018, Chad EITI published all contracts on its website and currently constitutes the most complete repository of contracts in Chad. It also published decrees approving the allocation of mining licenses, as well as all active ASM sector licenses, research licenses, semi-industrial production licenses and production licenses in the mining sector. Despite high stakeholder interest, the Glencore debt agreement has not been published to date, even if this is not strictly-speaking an extractives contract.

EITI reporting provides a clear explanation of the applicable fiscal regime and a description of each revenue stream. For the first time, the 2016 EITI Report also described potential fiscal exemptions and compared royalty rates for each producing company compared to what was paid in practice. A quarterly government report on the oil sector also tracks regulatory changes in the oil sector.

Chad published its beneficial ownership roadmap in January 2017, which includes agreeing a definition of beneficial ownership, adopting a beneficial ownership law, publishing data online and setting up a public register. The MSG adopted the definition of the 4Th Directive of the European Union on illicit financial flows and requires that companies report politically exposed persons. The 2016 EITI Report lists the information provided by oil and mining companies. Of the 30 material companies, 17 are either State-owned or publicly-listed, while the remaining 13 did not disclose complete beneficial ownership data.

The 2016 EITI Report as well as publicly-accessible SHT publications provide a comprehensive overview of state participation in the oil and gas sector. It describes the terms associated with SHT's participation in each project and company in which it holds equity, and documents the practice. Cash-calls for production cost and loan repayments are also disclosed. The report confirmed that there are no loans or loans guarantees from the state or from SHT to oil and gas companies, aside from the sovereign guarantee on the Glencore loans, whose terms are described.

The 2016 EITI Report provides an overview of the extractive industries, including the oil transportation and refining sectors, estimates of reserves for eight key oil fields and an overview of significant exploration activities.

The 2016 EITI Report disclosed total oil production volumes, by consortium and field. It provides the total value of production and how that figure was calculated. Chad reconciled production volumes disclosed by SHT and oil operators and included production costs. Stakeholders noted that there was no industrial mining production and highlighted challenges in collecting data on the ASM sector. Despite the inclusion of ten material quarrying companies in the scope of EITI reporting, the report did not include figures on quarrying production volumes or values.

Chad disclosed total export volumes and values by commodity and oil field for 2016, sources of the data, information on how the value of exports was calculated and main destinations. Chad disclosed granular and unique data about the sale of the state’s share of oil to Glencore in 2016. As stakeholders explained, government data on mineral exports was unavailable due to the absence of industrial production.

While the MSG considered the framework agreement for the provision of crude oil by CNPCI to the national refinery at a fixed price and the refinery’s supply of electricity to the state-owned power company at below-market prices as a material barter agreement, the arrangement does not seem to constitute such an agreement in the sense of Requirement 4.3. Coverage of this arrangement is nonetheless commendable and is considered a form of quasi-fiscal expenditures in this assessment under Requirement 6.2.

The 2016 EITI Report lists the taxes and levies that should be collected at the local level based on the regulatory framework. The report reconciles one of them, the ‘Contribution de la patente’, but does not clarify whether it was collected solely at the central level in practice. Gaps in subnational reporting are due to challenges in associating subnational governments to the EITI process, as confirmed by stakeholder views. It can be noted that none of the direct subnational payments applicable in Chad are extractive sector-specific.

Chad provided financial information disaggregated by individual company, government entity and revenue stream. In addition, it reported data on the sale of the State’s share of production and revenues collected in-kind by cargo.

The MSG oversaw the procurement of the IA, approved the TORs in line with the standard TORs and adopted reporting templates. The 2016 EITI Report included an overview of statutory audit procedures and actual practice and described the assurance methodology agreed by the MSG. It provided an assessment of the materiality of omissions and of the overall reliability of reconciled financial data. All stakeholders consulted expressed their confidence in the reliability of EITI data. The EITI Report provided an overview of follow-up on past recommendations and a new set of recommendations for 2016. Summary data files are publicly accessible.

The MSG agreed materiality definitions and thresholds and included the main revenues streams in the extractive sector. The 2016 EITI Report provided a comprehensive reconciliation of government revenues and company payments, including payments to and from SOEs. All material companies and government entities included in the scope of reporting comprehensively disclosed their payments and revenues, with gaps from three government entities’ lack of reporting relating only to subnational transfers. Full unilateral government disclosure by company and revenue stream was publicly available on the Chad EITI website, disclosed after the start of Validation.

The 2016 EITI Report reconciled material revenue collected in-kind with each producer and evaluated whether oil companies complied with their contractual royalty rates. In addition to volumes sold and revenues received, the report shows, by shipment, the type of oil sold, the quality of the oil, pricing option, selling price, contract type, invoice number, date of sale, date of payment and destination of the shipment. The report also shows the transfer of proceeds to cover cash-calls from oil producers, loan repayments such as the Glencore oil-backed loan, fees for the sale and the balance paid to the treasury.

The 2016 EITI Report disclosed revenues received from the transportation of oil, disaggregated by company and revenue flow. In addition, it included a description of transportation arrangements, a definition of relevant revenues collected and tariffs, the disclosure and reconciliation of volumes of transported oil, and the reconciliation of transportation revenues. The report also included transportation costs applied to the state’s share of oil.

The EITI Report describes the role of the SOE, SHT operating in the oil and gas sector. Material revenues collected on behalf of the State and financial transfers between SHT and government entities have been fully disclosed in accordance with Requirement 4.5. The Secretariat concludes that all aspects of this requirement have been implemented and the underlining objectives have been achieved.

The 2016 EITI Report was published within two years of the end of the fiscal period covered and the MSG approved the reporting period.

The 2016 EITI Report indicates the specific extractives revenues recorded in the national budget and the revenues recorded in the Citibank account in London. The deductions for loan repayments prior to transferring the net balance to the Treasury represent off-budget revenues. Chad’s EITI reporting and the MFB quarterly reports provide detailed information on the repayments of the loan off-budget. The allocation of revenues that are not recorded in the budget has been explained under Requirement 4.2.

The 2016 EITI Report provides the general statutory revenue-sharing formula for direct oil revenues in aggregate, as well as disaggregated figures for government allocations based on the supplementary budget. However, the report does not clarify the specific revenue-sharing formula to calculate each local government’s share and does not provide the value of executed transfers per local government. It uses data from the CCSRP 2016 annual report, but with a lower level of disaggregation.

It is encouraging that Chad has included some information on the budget-making process in EITI reporting and that the MFB website provides key documents about the management of public finances, including forecasted oil revenues.

The 2016 EITI Report implies and stakeholders consulted confirmed that mandatory social expenditures did not exist for extractives companies in Chad in 2016. Nonetheless, the report discloses some information on companies’ voluntary social expenditures.

Although the report includes a detailed description of the framework agreement for the sale of crude oil by CNPCI to the SRN refinery at fixed prices and the sale of electricity by SRN to SNE at below-market prices, it lacks sufficient information on the value of crude oil delivered to the national refinery and the value of electricity subsequently supplied by SRN to SNE. The reliability of the disclosed data was also a concern given significant changes between the initial declaration and the certified data.

The 2016 EITI Report provides the contribution of the extractive industries, in absolute and relative terms, to GDP, government revenues and exports, as well as a list of key producing regions. Despite concerns over the reliability of employment figures unilaterally disclosed by companies, industry representatives explained challenges behind reporting the number of employees and the EITI Report is transparent about constraints on disclosing comprehensive employment figures.

Requirement 7.2 encourages the MSGs to make EITI reports accessible to the public in open data formats. Such efforts are encouraged but not required and progress with this requirement does not yet have any implications for a country’s EITI status. Chad published machine-readable EITI reports and compared EITI data with the TOFE.

The 2017 annual progress report includes a summary of EITI activities, an assessment of progress with meeting EITI Requirements, in addressing recommendations from reconciliation and Validation and with achieving objectives set out in the work plan. The narrative account of efforts to strengthen the impact of EITI implementation on natural resource governance is particularly detailed and follows up closely on previous efforts to document the impact of EITI implementation, including through an impact assessment in September 2016.

EITI Reports are accessible online and for consultation at the Chad EITI office. Chad has agreed an open data policy and publishes summary data files. However, EITI Reports are not necessarily comprehensible for a wider audience. While there is evidence of significant EITI data dissemination until 2016, funding gaps have since limited such activities. Despite the use of online platforms, the radio, the press and activities at the Chad EITI office, the contribution of EITI data to public debate is not commensurate with its significance nor with the importance of the oil sector in the Chadian economy more broadly.

There is evidence of follow-up of recommendations and investigation of discrepancies through discussions within the MSG, the creation of internal committees to identify actors and areas for improvement, and active outreach to decisionmakers to push for reforms. Stakeholders noted the involvement of Chad EITI in consultations about key sector reforms.